ESG frameworks and regulations have developed due to rising awareness of sustainability and supply chain risks. They aim to enhance transparency, accountability, and ethics, encouraging environmental preservation, social improvement, and better governance. While fostering innovation and financial benefits, aligning with sustainable development goals, these measures might increase costs for businesses, especially smaller ones. Differences across regions and a focus on compliance could inhibit real change, promoting a superficial 'tick-box' approach rather than significant enhancements.

This article takes an in-depth view of some of the most relevant recent regulations and analyzes how effective they seem to be.

Unraveling Supply Chain Regulations: From Past to Present

We traced the evolution of supply chain regulations from non-binding guidelines to binding laws, examining their impact on corporate sustainability. Along the way, we explored the challenges businesses face as they strive to comply with these constantly evolving standards.

Note: The list of regulations and frameworks mentioned is a high-level list of the most mentioned acts.

Global and Non-binding

When analyzing global and non-binding regulations, although they provide crucial frameworks for promoting corporate accountability by offering guidelines for responsible business conduct, they also have limitations. For instance, they lack legal enforceability due to their non-binding nature, potentially hindering compliance. Given the broad scope of the guidelines, implementation challenges arise, particularly in regions with weak governance.

Here are a few examples of recent sustainability regulations:

By Region and Binding

Binding legislation requires companies to meet specific standards in sustainability, environmental protection, and social responsibility. Non-compliance risks legal penalties and reputational damage. However, weak enforcement, insufficient penalties, and legal ambiguities often lead to criticism.
Additionally, logistical and resource constraints, especially across borders, limit the effectiveness of regulatory bodies in monitoring and enforcing compliance. Furthermore, the penalties imposed are often disproportionately low. Moreover, these bodies depend on companies’ self-reporting without independent verification, leading to underreporting.

By Country/State and Binding

State or country legislation on supply chains encounters several challenges. These include jurisdictional limitations, enforcement difficulties due to resource constraints, and compliance burdens, especially for smaller businesses. Additionally, fragmented regulations across states or countries can complicate compliance for companies operating nationally. This underscores the importance of coordinated efforts between states and the federal government to address supply chain issues effectively.
In addition, regulatory bodies contend with logistical and resource limitations, mainly when operating across borders, which can hinder their effectiveness in monitoring and enforcing compliance.

Unveiling Vulnerabilities Sector Screening for Supply Chain Controversies

In this section, we explore the evolving landscape of supply chain regulatory frameworks and ESG risks in supply chain management. We also dive into how future regulations will affect global trade, corporate responsibility, and sustainability efforts.

Supply Chain Controversies Over Time

We analyzed supply chain-related controversies from 2019 onwards and found a consistent increase each year, peaking in 2023. Concurrently, mentions of various frameworks, laws, and legislations [mentioned in Part I] related to these issues have also risen.
Our analysis reveals a strong and positive correlation between the two trends (r=0.99), indicating a significant relationship. While the apparent increase in supply chain issues, breaches, and controversies may be concerning, it's largely caused by implementing more frameworks that increase visibility and accountability. Even without binding regulations, companies' reputations are affected. Thus, the proliferation of laws and frameworks contributes to the heightened online attention to these breaches.

Supply Chain Controversies: An ESG Analysis

For this analysis, we primarily focused on environmental and social issues within the supply chain, as legislation often targets these areas due to their significant external impacts. Issues like environmental damage and labor violations are most likely to occur in the supply chain and can profoundly affect communities and ecosystems. Governance issues, on the other hand, are more internal and directly pertain to a company's operations and management practices.
Therefore, we analyzed a sample of 31,011 entities across industries with frequent mentions of ESG-related supply chain risks, focusing on social and environmental risks.

Specialized Retail has the highest incidence of social and environmental controversies, followed by Technology Software and Automobile & Components, respectively.
As shown in the graph above, many of the issues highlighted in the Social ESG supply chain pillar are driven by human and labor rights breaches, which significantly contribute to the ESG risks mentioned.

Social Risks in the Supply Chain

In specialized retail, many brands face scrutiny for alleged forced labor; some examples include Amazon, Hugo Boss, Diesel, and Costco.
Additionally, Amazon garnered widespread attention when the company settled a $1.9 million human rights abuse claim. Consumer groups sued Starbucks over deceptive ethical sourcing claims linked to human rights issues.
Walmart and Centric were also investigated for human rights violations. Moreover, reports tie Amazon and IKEA suppliers to forced labor. These controversies dominate ESG supply chain discussions in retail.

The automotive industry ranks second as notable companies like Tesla face criticism, with allegations ranging from opening showrooms in China linked to genocide allegations leading to backlash and investigations led by the US Senate. Tesla's involvement with child labor and its battery material supplier's recurrent human rights abuses further add to the scrutiny.
Furthermore, we detect multiple mentions regarding Volkswagen's supplier breach that could impact up to 3.3 million customers. Moreover, slave labor accusations resurface for Volkswagen in Brazil, while companies like Toyota Motor, General Motors, Tesla, and Volkswagen suppliers are accused of exploitative labor practices in Southeast Asian factories.

Regarding the other industries, we also see that technology hardware displays a significant proportion of mentions stemming from mentions of forced labor for Lenovo, Cisco, and Intel, and numerous controversies regarding Apple, among many other allegations.

Similarly, Companies from the food and beverage manufacturers industry were also linked with human rights violations and infringements on labor rights, with companies like Tyson Foods, McDonald's, Hershey,  Pepsi, and Nestle having multiple supplier issues connected with child labor, discrimination, and exploitative work. While Technology Software companies mentions were primarily related to contractors and content moderators’ health & safety issues and labor rights infringements from companies like Meta, Microsoft, and Google.

Environmental Risks in the Supply Chain

Environmental risks, though relatively fewer in proportion compared to social risks across sectors' supply chains are notably prevalent in specific sectors, notably in oil and gas, where incidents such as oil-well blasts are due to the lack of safety practices, improper disposal, harmful emissions from gas flaring, unremedied oil spills disproportionately impact communities and contractor negligence. This negligence has resulted in substantial environmental harm, endangering both communities and workers and, in some cases, leading to fatalities.

In specialized retail, brands’ suppliers are linked to deforestation, illegal extraction of minerals, animal cruelty, and illegal waste disposal. Similarly, controversies arise from controversial mining, breaches of clean air acts by suppliers, deforestation, and questionable cobalt sourcing in the auto and components sector. Environmental concerns also impact the food and beverage supply chain, with prevalent issues like deforestation, animal abuse, and unethical sourcing.

In sum, the evolving supply chain regulations reflect a global commitment to sustainability and ethical business practices. Navigating these regulations presents challenges and opportunities for businesses to lead in corporate responsibility and advance principles of environmental stewardship and social equity. Embracing these regulations as a compass rather than a constraint can help chart a course toward a sustainable future.

Reach out to SESAMm

TextReveal’s web data analysis of over five million public and private companies is essential for keeping tabs on ESG investment risks. To learn more about how you can analyze web data or to request a demo, reach out to one of our representatives.

Happy new year! 2018 already holds many exciting news with various projects and clients already onboard. We begin the year with 2 recently signed contracts with top-ranked hedge funds, additional features and cryptocurrencies added to L’Humeur des Marchés and published plentiful of internships and job opportunities. Moreover, following our partnership with Eagle Alpha and the event in New York last month, we will be organizing a roadshow in London to meet high-ranked hedge funds on February 7th and 8th.

Collaboration with new major clients

Recently, we have signed 2 major contracts with top-ranked hedge funds.

The first contract is with Nikko Global Wrap (one of the subsidiaries of Sumitomo Mitsui Asset Management, a major asset manager in Japan) managing JPY 1.7 trillion.

Second contract has been signed with La Française Investment Solutions, a subsidiary of La Française Group, a top 10 French asset manager with more than €64bn assets under management.

This great news proves our technology is trusted by major financial institutions and gives us more confidence to continue looking for collaboration opportunities worldwide.

Future contracts and new distributor

We are currently in negotiation talks with another major French asset manager, a bank, two insurers and a US hedge fund. We hope to keep up at the same pace for the whole year and sign new contracts in the weeks ahead.

Also, we have recently started a new partnership with Neudata, a major UK alternative data distributor. We have signed an agreement, so they could support us and promote our solutions & services.

After New York, London

Last month, SESAMm made its very 1st trip to the USA for the BIG Alternative Data Showcase week organized by our partner Eagle Alpha. It proved to be a valuable experience from which multiple business opportunities arose and we launched many product trials with significant US funds.

Next month, we are planning a roadshow in London with Eagle Alpha. We already arranged multiple meetings with hedge funds and, thanks to Eagle Alpha’s support, we are given a unique opportunity to present and show our solutions to asset managers and C-level decision makers.

New additions to L’Humeur des Marchés

Concerning our platform L’Humeur des Marchés, we are glad to announce that we will soon be providing historical data concerning the assets. This update is planned to happen during next month and will give users more flexibility and options related to their investment and strategies.

In addition, an alert module is under development and we have begun to include cryptocurrencies into the platform. Most of the top-ranked cryptocurrencies are currently covered – such as Bitcoin, Ethereum or Ripple, among others as shown below.

Developments are planned to further extend our coverage of alt-coins with the objective to include every single major capitalization into L’Humeur des Marchés.

New job opportunities

Last but not least, we will be scaling our team during 2018. Multiple internships and job offers are currently available to further support SESAMm’s growth and ambition. We are looking for candidates in the fields of IT, finance and Data science but, most of all, highly motivated individuals seeking challenges! You can find all our offers by following this link. We would be very excited to receive your applications or recommendations for profiles seeking to work with us!

Thank you for your support and best wishes to you for 2018!

Sésame, ouvre-toi, or in English, open sesame, is the famous magical phrase that inspired us to name SESAMm 8 years ago today. And true to its name, since its inception, SESAMm has been opening doors to a new world of advanced analytics powered by natural language processing.

TRIVIA QUESTION: Why the unusual spelling of SESAMm? (Read until the end for the answer.)

Our heritage

Unlike the phrase’s magical nature in the “Ali Baba and the Forty Thieves” story, SESAMm relies on technology to open doors and uncover hidden treasures. And that has been our goal since we started the company in April 2014. Pierre Rinaldi, Florian Aubry, and I saw the vast amount of textual information available on the web, from news websites to NGO reports and social media. We set out to find a way to translate all that information into powerful, digestible, and actionable insights. In eight years, we’ve created the most extensive data lake in the industry that relies not only on social media but also on forums, review sites, and premium data. Today, the data lake comprises nearly 20 billion articles and grows by 20% year over year.

As we alluded to earlier, the real key to the treasure trove is the technology that uncovers and synthesizes all that data: artificial intelligence, particularly natural language processing (NLP). Our highly-talented technical team developed advanced algorithms to accurately “read” web articles and distill them into only the most relevant data for our users, received as signals and alerts.

In these eight years, we’ve been able to serve and work with some of the brightest minds in the industry who have trusted us with multiple challenges. Asset managers, private equity firms, and corporations leverage SESAMm’s products for investment strategies, deal sourcing, due diligence, portfolio monitoring, and ESG and positive impact indicators.

In particular, we’re using our technology to transform the ESG industry. For example, we help track controversies and monitor the positive impact for companies that no one else covers in the entire world.

Our team and values

As we proudly surpass the 100-employees mark soon, this is a good moment for us to pause and reflect on where we are and where we want to go. Our mission, to become the world’s reference for textual web data analysis, hasn’t changed. We’re more convinced than ever that we are on the right path to achieving that goal.

Our team collaborates between six different sites in 5 countries, many offices, and various cultures. As a deep-tech company, 70% of the group comprises PhDs, engineers, and developers. Moreover, they’re an amazing team that follows horizontal management and servant-leadership approaches, part of the culture we value and insist on.

To close SESAMm's first eight years on a high note, Forbes included me on their 30 under 30 list only a few weeks ago. In my eyes, that is a big recognition of the company and the work the team has done over the years.

Our future

More ESG. As we mentioned before, we want to transform the ESG industry. Currently, we cover a total of close to five million public and private firms. We aim to bring more transparency to the market and align with new regulatory frameworks in a fast-moving environment. By better analyzing companies, we believe we can help investors push for change. For example, to help monitor for positive impact and align with UN sustainable development goals (SDG), we’re launching a new product to systematically generate these types of alerts.

Of course, we want to bring these technologies to new clients, like:

• Private equity firms
• Quantitative asset managers
• High-yield portfolio managers
• Corporations to fuel their CSR strategy

From CSR teams looking to evaluate their clients and suppliers from an ESG perspective to central data and analytics teams wishing to generate custom NLP analytics at scale, SESAMm aims to become a central solution.

More importantly, we want to democratize NLP web data. This battle for good technology is our ultimate goal because every large company will need to address this topic at one point or another. So when it’s your turn, we want to be there to make it easier for you to achieve tangible results.

And last but not least, as a fintech company, we set our goals and ambitions on higher grounds whenever we complete a funding round. Our Series B with major private equity firm The Carlyle Group (CG) and New Alpha, a Paris-based fintech VC, was a significant step up. And the more we scale, the bigger we see the potential to apply our tools within existing or new fields, industries, use cases, and countries. This step-up naturally inspires us to plan for new ways to grow, whether with new services or reflecting on the potential of an upcoming funding round.

Our appreciation

Thank you. Without you, we wouldn’t be here. Special thanks to the SESAMm team. To our investors, The Carlyle Group, New Alpha, Havenrock, Caisse d’Epargne, AngelSquare, and more. To our partners and all who have supported us along this journey. And most of all, thank you, our clients. Because of you all, we have grown from a small-city-of-Metz team into an international company.

Cheers to you, us, and our future. Happy 8th anniversary, SESAMm!🥂

Oh, right! The trivia question! Here’s the answer.
SESAMm is an acronym for:

• Stock
• Exchange
• Statistical
• Analysis
• Mechanism

The “Mm” in SESAMm hints at the French pronunciation of sésame. But mostly, we used the small m from the word Mechanism instead of an e to guarantee that the URL would be available.